, the truth is there are many studies that show that that reaches a point where it is a drag on the economy. we do not know what that point is, but we know we are in a >> we do not need that is for no surprise you have too much debt. one has to be worried about that. what makes sense to think about, what we know about how to grow the economy echo we need to be looking at private investments, public investments, raising our revenue in a way that is good as possible for the economy. we are not doing very well on three of those four. we could be doing better on private investments. there is a whole congress of economic growth strategy which which sensible debt reduction has to be a part of. and >> i quite strongly disagree. >> you have been looking for that. [laughter] >> too much cable television.

--th a ton of respect, because bob and maya know this very well and have been working for a long time, but on the near-term economy, i think you had it backwards. one of you said the economy has done better than we expected. in fact, pretty much every forecast, almost every fellow reserve forecast has been marked down because the economy continues to be worse than we gao -- gdprrently growth year over year is currently barely two percent. we do not have second-quarter yet. the forecast coming in around one percent. >> revenues came in higher than expected there it it was not a policy. >> that is the second when i wanted to disagree with.

demonstrably that is not a function of a faster growing economy. i grant you it is part of it. it would be good to know how much.someone should decompose that. in my first comment, i talked about $2.8 trillion in deficit savings. the tax increase deal they were talking about. the fiscal cliff. anyway, holiday, the expiration of the payroll tax. we have engaged in significant economic policy to bring the budget down. economic growth is part of it. it has been deeply subpar. to say, i'm ok with the demos and reduction we have as of because the economy is ok seems to be really missing a lot of the pain going on out there. >> on the one point that was made, which is that if our debt

to gdp ratio grows out of flat, -- goes out of whack, that would have a big challenge for economic growth. we can disagree, but let's assume that is true. what i find frustrating about the current debate is, we have an economic growth spurt now --thout a long-term talent. economic growth problem now without the long-term talent. -- challenges. it is this whole discussion about ensuring that we are focused on those long-term -- which i agree. we do not have rational but-- we don't have rational political actors. with eight which take a different course. it is frustrating to hear about potential challenges to economic growth 10 years, 15 years, 20 years, when we have real >> fiscals right now. headwinds, a point and a half

off of growth this year. >> one of the things i noticed that your report is you basically said, we have focused a long time on trying to get a grand bargain, a deal big enough all at once. your report points out grand bargain loosened.-- is elusive. i wish we could put in place a thick that would surpass at occasions and bring a lot of confidence. it does not seem the political environment will be able to, but that. your proposal is unrealistic. your proposal being what we would do getting rid of a couple of years of sequester. i think it is like three quarters of it would be from revenue. whether you think that is the right policy or not, that will not happen, either. one of the questions is, what could we possibly get done when we should be trying to work on these issues and there will be moments when we are working on these issues. let's think about politically what can get done. i am not sure your report lays out something that has much of a chance of going forward. >> let me try to respond.

we put forward a proposal that essentially says we could have a smaller deal. our view is to have roughly 50% revenue. 50% of revenue. we accept her for it. we count the fiscal cliff as part of the sequester. but i think what we are saying is, when you get to a reasonable amount, one you're talking about a couple hundred billion dollars, that seems much more reasonable on both sides. there is spending we could have, and revenue that can make up for that. i think we could undo these damaging sequester cuts for a time until we get to what is really hurting google right now cbo doesight now.

project 700,000 jobs are predicted to be impacted. we are simply saying, it seems to me reasonable to expect the house of representatives that cannot do 800 billion dollars of revenue can do $100 billion of revenue. there are ideas circulating now that make that a reasonable amount of money. >> i am not sure you both use the phrase. you talk about the forces that create the deficit framework. can you put meat on the bone and tell us what are the political groups you think -- feel free to blame the media. >> david leonhardt has been obsessed with austerity.

>> probably true, and lawyers. that has created the framework the president decries is damaging? >> can i start?we believe in facts. the facts were worse.three years ago,when the debate started our austerity and having long-term deficit reduction, etc., the predictions of where we would be were far worse. to me, it was reasonable for actors to say, this is a significant challenge. we are not arguing there is a crazy of lines of people trying to keep growth down.-- crazy a line into people to keep growth down. that was a reasonable factor. our point is right now, the world has changed. it seems to me policymakers throughout the spectrum should recognize the change and adopted. the issue is, where are people right now?

what are they arguing for austerity over everything else right now? that is what we are concerned about. >> let me do -- i want to do which inger-pointing. think is what you ask for. i do not totally agree. >> it is funny i am the nice person. >> i know. i think neera is right.cbo projections. krugman wrote the other day that a 10 year budget forecast we alletty boring -- expected the budget deficit to get really big. i was there working through the administration when it was happening. right question is is not, is it too large in 2008, 2009, 2010 it is it big enough to offset the magnitude of the sector -- of the private sector demand contraction.

the forces that have aligned here are those who are actually quite a bit less interested in actual deficit reduction menu would really believe.-- and you would really believe. bob really want to bring the deficit down. there are more people who want to just really shrink government. they want to get rid of social insurance because they ideologically oppose it. they do not like the safety net. if you give them the opportunity to cut medicare costs like the president did in the election, they attack him for that. i do not think, when you write down the numbers, they are as serious as they say.i think it is the tea party, i think it is the republican small government, overall, regardless of what that actually means in the long term, that that has adopted deficit reduction as an ideology. i would say they have contributed to a level of--

there are groups that have contributed to a level of urgency in near-term deficit reduction and it is quite different than the views they espouse. perhaps it is the communication thing. >> let's hear more about that. what do you mean? >> say more about what? >> about how you think -- >> how their groups -- what you're saying is their groups have contributed to an over emphasis. >> let's clarify that. our focus has been on medium and long-term. >> that is what i meant when i said, maybe it is a communication thing. every time there is a proposal for reducing the deficit, i get an e-mail from your guys that say, it is not going far enough. including the president's speech the other day, where i got an e- mail saying, -- that was not a proposal to reduce the deficit.

>> that was not to reduce the deficit. >> it was to address inequality. >> no, i am saying the criticism was i wish the president had addressed reducing the deficit. i stand by my assertion. every time there is a proposal to do deficit reduction, your group has to do more. you argued to do it in the medium. what i hear you saying today makes sense to me. >> it is the failure of the media not to interpret us properly. >> you make the argument there, which is that it is the only message that comes out, whether it is from a media or -- we need to pay attention to the deficit. that has more impact on the debate than the timing of the thing. >> it is difficult to distinguish between short-term and long-term. people here deficit and they do

not necessarily look at short- term and long-term stuff. that is one of the vicissitudes of discussing the whole issue. you get the distinction that they are more interested in a sustainable shrinking sustainable fiscal policy or shrink the government. a different argument. i want to get back to the, what do we do about it? the political frustration i have, and this is part of what is going on, even with the president's tour, it is not so much a resetting as i see it, as just swapping trenches. you go from one trench warfare to another, so we have the sort of trench warfare on the proposal that cip has put out. people are talking past each other and not with each other.

i think, if we want to have the discussion about economic growth, let's say we were to say, things have changed, so let's talk about a year, -- growth here, but let's also talk -- the structural deficit we have always made our concern. i think you can do both. you have to do both. what is missing is some sort of process to get us out of the trenches. we can have trench warfare over the medium-term and overgrowth in the short term. i would like to regular order on the budget, one way to do it you have got a house budget, a senate budget. there is not a mechanism right now where we could make the sort of trade-off and say, maybe we should except higher spending on things that have a high

potential for growth in the short term. -- what would you say to the norm argument, which is that it rensteine norm o argument, which is that it is not about making sure barack obama and john boehner like each other, i think what he would argue if he were here is that one party has gone much further from the center than the other party. those of us in the media and ad groups that try not to take a side have a hard time with that. it is not about regular order. is it -- it is about the fact barack obama will cut medical security.-- medicare and social security and republicans will not raise taxes. what do you make of that? >> that is a problem. [laughter] on the other hand, i think you

need to probe for the possibilities -- the senate republicans for example, you have folks there that would make a deal. i would like to see something going on there. that there was a budget negotiation to test the proposition. everybody recognizes at some point you will have to be part of the solution.-- raven knows -- revenues will have to be part of the solution. >> i think the policy for this are obviously terrible. it is toxic and partisan and it is difficult to work on these issues together. i do think when you asked your question though, you have to --member what we have done so so far as we cut defense, cut domestic discretionary, and we raised revenues. but we have not done is dealt with medicare and social

security. the part of your question the one party will not raise revenues, we have done revenues. what we have not done is entitlement reform. for this party -- for this panel to the balanced, you would have wanted to invite some of the far right to make this case. they would say, we have done everything but entitlement reform. >>that is a great example of how this conversation gets skewed. one of the reasons i we have medicare, we have taken a lot of money out of medicare. we have a lot of reform in medicare. it is just not counted. >> it went back into a new program. >> there is deficit reduction at the end of that. we are taking money -- we are taking money -- the affordable care act itself was a deficit reduction strategy. >> particularly in the long- term. >> i think one of the challenges that has been so disconcerting

in why we are concerned overall is because if you look at what happened, the entire conversation does move right from the framework. the president is willing to put much to a balanced plan. the chagrin of some of his liberal allies. he put forward the plan. he was met by a house republican caucus that moved farther to the right. the paul ryan budget moved further to the right than it had in the previous sector. one of the challenges is simpson-bowles came out. less revenue in response.more spending cuts in response what we have seen is that, while the republican party has moved, what matters for us is the conversation on deficit reduction has moved farther and farther right, as measured by the advocates as well as the

president himself. >> even with the year-end stuff, over the great fight, bill clinton has one.-- in the great fight over high-end tax rates, bill clinton over george w. bush, bill clinton has won. >> is what i want to say. 82% of bush tax cuts were locked in by the fiscal cliff deal. >> i am talking about high and rates.- high end >> yes. this.not know if you are i would be interested in your response. i do not think we are near done on the revenue side. i have been stressing we have cut 2.8 million over 10 already. if you look at the policy part, 70% has been spending cut -- cuts.30% has been revenues. ism not sure if the optimal 50-50. certainly, 70 -- 30 sounds unbalanced.

having locked in 80% of the bush tax cut is not mean we are done. thirdly, i am not sure -- the president in his budget that fourth -- has elaborated, 400 billion dollars in medicaid and medicare cuts and $200 billion in other cuts. you know, i think the analysis you describe sounds accurate to me. >> should he be out pushing the budget? i agree there is a lot of good stuff in the presence question. that's there's a lot of good stuff in the president's budget. should he be out pushing the budget? >> he has his offer on the table. >> this is the issue of the senate. they are looking for a counteroffer. i've you have got to use the bully pulpit to rally putt -- budget support.-- air going to use the bully pulpit to rally budget support --

>> rally the public, is that what you are saying? >> i think that would be cognitively dissonant from where i think the general public is. i do not think the general public wants to hear the president go up and say, look, if it is long-term, down the road -- we have accelerator now -- break later. i get that. you said it some other way earlier. i don't think --i think what people want, need, and should hear from the president is his plan to do something about an economic recession not official at this-- that is not official at this point but has lagged on. >> i think he can feel the pain on that. he can talk about his budget proposal. people want to hear about that. >> can i ask what we are trying to accomplish? what does it matter?about him speaking about it? they know what the budget

proposal is and they are not addressing it. they have not done a counteroffer. the challenge we have is there are many reasonable voices in the senate. it is hard to move a bill in the senate. it is hard to get a minority leader in the senate to agree to remove -- to move the bill when he knows that house republicans will kill it.he is in a precarious position, shall we say. we are in the world of political constraint. the question is, how do we break out of it? >> you have all the problems, whether he is pushing the budget for doing what he is doing. he is talking about the need to do a better deal for the middle class. you have political problems back in washington a matter what you are doing. if he involves an engagement with the republicans, there is more of a chance of getting something done. i think, hitting a resident court with the public.-- eating some resonant chord with the

public. again, if we are just resetting into different trenches, republicans will not be receptive to the president the series of speeches he is making. but, if there is some sort of acknowledgment of the issues they have the budget, i think there will be more of a -- can i --t to the chase? >> can i cut to the chase? a lot of what you are saying is resident to me. it seems to me we are stuck in the trenches because of republican intransigence he on revenues. help me figure this out. i asked earnestly.suppose we agree, as we may have, that a two-year deal is all we can hope for and it would replace the sequester with an equal amount >> did wet savings. agree with that? >> this is a hypothetical.>> i

thought you said earlier, if we cannot get a grand bargain, you said earlier -- >> i do not want to use the sequester to create another sgr. we should not limp from one crisis to the other. i -- at least replace part of the sequester. >> how do we get out of our trenches without revenue? is it possible? >> political trenches? >> he used the medical or -- metaphor, and i think you use the word trenches.both fighting for things that will not happen. >> new revenue has to be part of it. no doubt. >> as long as one side says, i will not do any revenues, i guess i do not see how you are --t stuck in your trenches) your trenches. >> do you viewthe fiscal cliff deal is different from the others because of that ticking time bomb? or do you think it signaled a weakening?>> right after

president obama won, john boehner made a speech that he understood change in revenues were on the table. what i a with the fiscal cliff, it was a terribly botched moment where we could have done a much better, where we could have done longer-term savings in place. we could have raised a lot more revenues than we did by doing it the right way. we could've had the kinds of savings right to deal with the budget. republicans have always been pretty clear on this it comes to two things. it comes along with real structural reforms and entitlement programs and it comes through raising them through tax reform instead of tax rate. the fight on rates and reforms deferred attention on an all- around better deal. >> one of the things fascinating about this today is how skewed it becomes. if you talk to the american

people, their wishes were represented in political discourse more perfectly than it is now in washington. in part because of the recession we went to.-- went through. people were much more open to tax increases for wealthy because wealthy taxes had declined because of the bush tax cuts. also, the issue entitlement reforms. we do believe you can have -- for example in medicare.-- greater efficiencies, for example, in medicare, etc.. it is not that republicans want to entitlement reform. let's not gloss over their demands, beneficiary cuts in fascinating is about the discourse is that is the thing people are anxious about losing the benefits,

losing things they have benefited from. the challenge we have in the medicare debate, what i find so frustrating about the debate is that so little of the debate actually addresses the fact things have seriously altered over the last three years. yet, we considered -- continue to have a conversation as if it were the same as it was five years ago when inflation was at a higher level. if we are at a place where medicare, this is where the assumptions go forward, or even lower because the affordable care act is working effectively, etc., the whole debate about these entitlements would radically alter, as well. we are willing to say, let's put all the ideas in place now and make them permanent even though we do not know if the world will be better or worse.

>> it would be more helpful in this discussion, because so much is focused on how you, and-- on the politic of this, and if you republicans on the panel -- but i would say the politics in washington is terrible. if you want to have a republican -- perspective, it would be useful to be brought into the discussion. republican ornted democratic way or compromise, there is a legitimate concern about the immediate and long-term challenges and in athens and is reflected in every independent agency.also concern about whether washington can govern and whether we can deal with the challenge. coming up with a realistic solution that is going to be

implemented is a huge challenge because it seems that washington is broken and it gets played out on that issue a lot. you brought up a couple of times as the facts have changed. -- run i run growth groups that have been around before the economic crisis in 2008 and before that we were very concerned about the long- term situation facing the country driven by health care costs and aging population and also insufficient revenues. then the deficit by rocket because of the great recession. that was not a time i was worried about the deficit at the moment but i was worried about going into depression. and then the deficit going -- coming down quickly. it was driven up pretty quickly and coming down. the structural problems have not gone away. i continue to be concerned about the same structural problems that were there before. in terms of health care, the really good news is healthcare costs are coming down. what is bad news is they are still growing faster than the economy. we need to continue to think

about ways to generate savings in health while containing to monitor what is working and not. those things make sense to think about implementing whether we are going three percent or four percent faster, or five percent or six percent. still growing faster than the whole economy. >> i want to ask briefly one thing and then open it up. can medicare and social security look largely the way they do now for ever? right to arguets for what our modest changes to those programs rather than big ones? or would it make more sense to so, you know what -- we were committed to, for example, pre-k education, that we would be willing to take medicare to 67? basically long-term actually, modest changes in these programs are going to be --

>> >> historically we have seen to challenges in medicare. the growth of the aging population is never a surprise. not like all of a sudden a bunch of 80-year-old showed up. >> since 1946. >> and the issue of medical inflation. i would say that what i would argue actually is that the fact that we are having somewhere least $500 -- at billion change in healthcare expenditures by the federal government as predicted by cbo, the cause of some of these issues -- you may have a higher number. medicalduct of inflation, that is a structural change. what is happening with the medicare inflation has a huge

profound impact going forward. it dwarfs what we would do on things like reaching the age. on criticism i have proposals like raising the simplye age is that, it shifts costs. it raises the national health care costs. it lowers cost of the federal government and raises national of their expenditures, costs for employers and individuals. as a policy matter, supporting makesind of cost shifting us spend more but the federal government spends less, makes little sense. i think the big issue -- i think the big concern i have about this is that if we have learned anything in the last few years it is that the political forces currently aligned in washington are not going to take medicare savings or social security and invest them in pre-k. the things we have done over the last couple of years is really

kill all the investment that mattered to competitiveness like education, research and investment, in order to preserve tax cuts. so, if i could come up with a magical world in which we had a rational budget, i would make an whole variety of different outcomes. is sothink this construct far removed from the political world that you and i live in that it does not even make sense as an option. >> i am a little more optimistic, i think. either way, as i recall the that the cbohink forecast over the next 10 years for medicare and medicaid by abouthas come down $900 billion over the past six months. is that about right? is a big number. hundreds of billions. water has done a

lot of writing on this. think with some quite minor changes to social security, it could achieve fiscal solvency over the 75 year forecast. and with the medicare, i will neera butree with where i would disagree is you said something like it has undergone a structural change. i hope it has. it may be has. we can't be sure yet. a lot of people who look at this very carefully to understand the koran-year-old that's granular -- the granular level says it has. i do think there are structural changes. by the way, the thing that really drives of this is excess cost burden. the rate at which health care spending growth faster than gdp per capita. i think it has been around zero

for the past couple of years. that is a big structural change, if it sticks. cpi,rms of the chained something you raised earlier, -- this is often talked about in terms of entitlement reform. i don't see it that way. first of all, if you wanted a more accurate price index for elderly people i do think cha in indexes are more accurate. cpi,hould do chain elderly my first comment. secondly, if you are going to inject chain cpi in this has to be be in the context of getting a whole lot for it. it has to apply to the tax code, the tax brackets as well. it has to include protections for low income people whose benefits are disproportionately cut and include significantly new revenues. that is the only way i would consider a deal like that. >> meanwhile, if we have a microphone, let's circulated. >> if we just take the politics out of it.

i once understand as we both would say we do need to do more deficit reduction, we do need to make changes to social security and medicare. would you say it would be smarter to start to make the changes now rather than waiting? oh, you said take the politics out. >> makes more sense -- >> that's why i don't think -- my view is they are very important goals and we should have them, but where we may disagree is i think the first, second, third are you ready for washington policymakers right now should be what to do about economic growth. that is the point i would make about political resources. are only so many decisions anyone can make. the discussion we are having on ing-term deficit reduction --

would love deficit reduction, but i would love to have a set of policies that actually -- hire back some of the teachers that were fired at the state and local level. that is really counterproductive here to make some investment in infrastructure, because -- >> if you were doing one big factor -- package, you would also include putting these things and now rather than waiting? >> here is what i think neera would do -- [laughter] if you can make -- wave a magic wand and put the politics out of the window, because of opportunity costs, there is only so much political oxygen. room,d put you two in a michael linden, dean baker, people from very different views but who all share -- and some conservatives, that's right. and say, what you came out with is what we would do. so, it would not absorb the political oxygen that we need right now, but that we have a backloaded plan that would get

us to fiscal sustainability that was balance. i think there are enough people in town that would go there. >> on the aisle. go ahead. my name is rochelle friedman, with the coalition on human needs. earlier jared mentioned the pain that is out there. we have been documenting since march 1 the pain to low income families who are losing head start, losing housing, and all of those things. there is a time fast-growing, deep inequality in our country. then on top of that, you have the unemployment situation. don't think corporations have contributed one penny to deficit reduction. maya, dold ask bob and you support tax policy changes that result in corporations --

many of the wealthiest who have paid zero taxes over a number of years, do you support policies that would make wealthy corporations contribute more to so,cit reduction and if what tax policy changes for corporations would you support? >> good question. thank you. >> are we taking them in turn? >> go ahead. >> i will answer that question first. i think your point -- your starting point about the problems is absolutely correct. i looked at your coalition and the fact that the sequester -- again, the sequester is going to do real damage. it already started to. and the damage is only going to get worse. that is because we have been focusing on the wrong budgetary fixes. we need to look at the real problem parts of the budget. my solution is you desperately need to reform the tax code, both individual and corporate. what it means is looking at the over $1.3 trillion in tax breaks

we have a year and lost revenues that comes from the deductions, exemptions, exclusions. these have different effects the individual and corporate side. you need to reform them, get rid of the ones that are not working as much as possible and use that as a basis for tax reform, which is going to have to contribute to raising revenues, along with doing the rest of the budgetary savings as necessary. i think the overall goal honestly should be to think about how you make the tax code more progressive. i would do it in a way that is least damaging to the economy. i would probably do it at the individual rather than the corporate level because of competitiveness issue. but i think the overall point is a really important one. but tax reform is going to be critical to getting this done. right now the difference is and different industries are treated , corporations are treated, hireling uncompetitive and highly unfair and it also applies to the individual side. side,the corporate

revenue neutral corporate tax reform? >> i think that the white house, i would support revenue new jewel corporate tax reform. -- revenue neutral. --i think that we are going because of the aging of the population, and even if zero excess cost growth, we will have a big problem simply because there are more people like me who are getting older and will soon qualify for benefits. that is what is really driving up the spending over the longer term. -- as we go from a set point of federal spending at a certain level, around 21% of gdp, to a higher level, we are going to need more revenues. i agree with maya on the tax reform, most of the proposals from bipartisan groups like

domenici-rivlin and erskine bowles and alan simpson followed the principle that you should get rid of a lot of the exemptions and credits and deductions and loopholes that both individuals and corporations benefit from. lower theuld actually rate if you wanted to and still get more revenue in, or dial up need, whatever you need to make it all work. i do not actually think revenue -- i do not think tax reform should be revenue neutral. >> a quick factual point. the $1.3nly 10% of trillion tax expenditure we forgo is from the corporate side. i think is -- it is the issue of fairness people raise. >> annabel fisher. i will direct my question initially to bob but first to

preface it as a trivia question best for all of you up there or maybe in the audience -- what country in the world has the most billionaires? the united states. i personally am tired of hearing these talking points. of insultedd sort the people in the midwest and other parts of -- that they are not aware and engaged. >> i don't think i said it. >> we don't care about knowing about the budget. to bob -- i was very involved in the concorde coalition in seattle. i wish you were more out there now. this discussion today is about fixing the debt. what would the concorde coalition recommend today,? would you want to look at changing the entitlements? having worked in healthcare and

knowing what is going on with the affordable care act being one of those seniors now on otdicare -- and how it is n working, what would the concorde coalition recommend today in terms of knowing the politics in dc are broken in terms of policy? you did a good job when i got involved with the all. >> what do you think the resolution on medicare is? >> just on medicare? look, i think that we are going to have to do a number of things. would move away from the fee for service as much as we can, because that is a cost driver and drives -- it rewards quantity rather than quality. some things in the affordable care act that would move in that direction. i think they could be more aggressive. if i were to design a medicare

plan, it would probably look kind of like the domenici-rivlin land. we did move to a premium support type of system which capitated, put some sort of a cap on medicare cost growth but would enact some underlying cost savings that would allow you to maintain within that cap, and i think ending fee for service would be one of them. i do think beneficiaries can pay more, particularly at the upper end. means testedre premiums, as we are doing, is another route. does, to some extent, asked people to pay more. no doubt about it. but i think it has to be part of the solution. so, you know, those are a couple of big ideas. >> i want to quickly respond.

i think this is course is significantly damaged when you interject a level of rudeness that i thought your question did. not to sayareful something like you said i said. what i said -- and i remember -- i believe it will be cognitively dissonant if the president -- president went out and says i am yet to talk about the economy and he began by talking about his budget. i urge you to listen more carefully. >> [inaudible] >> the way. -- thank you. >> larry, concerned citizen. one of the structural problems i see is not all jobs are created equal. if you are talking about growth wee it seems to me that if believe this is a consumer economy -- if two thirds of the economy are based on consumer

consumption and you have so many people out there right now working two or three jobs and still can't make it, it seems like that is when the structural problem lies. this is at a time when corporations are sitting on trillions of dollars, banks are making unheard of profits, executive pay increases are going up 14% while most workers salaries remain flat. allaim that nearly half of americans don't pay taxes -- they can't afford to pay taxes. i guess my question is, how do we get those at the upper end, those of the corporate structure, those in the one percent, 10%, even the 20%, how do we get them to understand we are all in this together and if we do not break this logjam, this country is in deepdoo doo. >> then i take this one? -- can i take this one? wasink the president talking about a lot of these trends in his remarks, and i

think you are absolutely right. one of the great frustrations that we have is that people have not recognized enough how much growing inequality actually hurt economic growth over the long term. , we have done a fair amount of work on this and there are a whole range of reasons it is true. one of the ones you referenced, 70% demand economy. that means when people have they have income coming in, they are able to buy things and it is really important. so much is fueled by consumption. one of the big challenges we have had in this economy is precisely this issue, which is, their wages have been stuck. a lot of downward pressure on wages -- technology, global economy, other factors, that is creating real pressure downward in economic growth. one reason why economic growth has been anemic. you are getting at the kind of issue that was the espirit de

crops -- the downward pressure on growth in our country, it is almost completely absent from the discord in washington reasons,or process other reasons, we are so fixed on these issues of the fiscal cliff and previous points we had, challenges with deficit reduction. again, what you are pointing out is really the political economy question we have, which is, in a world in which we live today, how can we get focused on some of these challenges that are not 10-year problems, 15-your problems. in 10ill get much worse or 15 years, but they are really big problems today. >> i love the question, because i think it goes to the heart of the challenges. i do not think it is a political

economy in question -- question. i think it is an economy question. there are huge challenges facing the u.s. economy -- and the global economy -- but in terms of growing inequality. we do not know how to grow the economy enough. competitiveness -- we are not trained. we do not have enough workers who are trained to be actually function in this economy. these are terrible threats, not just to people who are suffering but the overall economy. we need to see him more holistically. one of the things that frustrates me on my think tank side -- the debate seems very stale. what i have not seen our whole -- new ideas, which is how we will deal with these and the globalize hypercompetitive, hyper integrated economy. i am hoping the issue is so deep and profound that people are starting to understand how it has such a ripple effect in the economy that some of the great minds will start moving in this direction and coming up with a new ideas. what concerns me is leaving the fiscal piece out of this discussion.

the economy is an integrated mechanism, right? we need to be thinking about growth and inequality and our fiscal sustainability and all of these pieces together. we are very compartmentalized both in capital and on think tanks. one of the problems that i see as a result of the excessive borrowing we have done for so long is our debt levels are now basically at historic highs, other than postwar periods, and what it does is it leaves us strapped when we think about the kinds of investments we need to be making in our economy. now we need to be thinking -- the budget really is trade-offs. we are putting a whole lot of money into certain parts of our budget and and we are neglect and others. i think that sequester and the need to fix our entitlement programs is just one example of that. we are real -- willing to cut investment for the rams that is aps onso you just put c

discretionary and not willing to deal with bigger challenges of healthcare and retirement because they are really hard and people push back. i hope we can kind of use and need to deal with our long-term budget as an opportunity to to rethink about our budgetary priorities. because i think they are backwards. i think we are completely sacrificing the kinds of investments and concerns there on the economy that really need to be -- >> just in the spirit of this agreement, let me just say one thing. -- spirit of thi disagreement. people talked about changing medicare benefits for the higher discourse in washington about entitlements has been about hitting middle income and low income people who receive these entitlements. think -- shouldn't think this is the forced about -- from conversation about inequality. -- divorced from the conversation about inequality.

supporting the effort to take funds from middle income and some low income beneficiaries, whether they are medicare or social security recipients, would exacerbate inequality as well. we should just recognize that. we could all say that there are people more deserving of investment, like the horrific number of poor children that we have in our society, but they -- we should also recognize in the absence of making a huge investment there, we are still -- deficit reduction often does create inequality. >> it does not have to. >> it has. >> it has, sure. >> my name is mark him a legislative education consultant . it used to be connected with a group called the -- foundation in arkansas which believes in the infusion of arts in education at all levels. left -- i am glad

you are kind of blending into my thinking on the question. seeing there is a group of people in congress -- nudge, taking on -k -- revenue increases off the table before the conversation begins. as the group think we have invested enough in education to satisfy our hyper connected economy and its workforce down the road? or not? >> i deferred to the group. i would guess none of you believe we invested enough, but i also think there is a serious argument to have and we are doing it in the wrong way. >> isn't that a chapter in your book? [laughter] i think you put your finger on the right question which is really -- it is not like a whether it is being properly targeted or not. i would be perfectly happy to but ifore on education,

it is for loans that subsidized toools that just charge more build sports arenas, that is not the way to do it. wouldam not sure that i -- >> early childhood? >> i think that is an investment. something we should be investing in. >> what it does remind me of, one thing this government does not do well enough yet, is we're starting to collect a whole on the performance of ayers programs but not doing a good job of integrating it into our budget. if we are able to do is take a better use of the data that we are starting with -- i think it is likely to happen with the fiscal pressures -- would do more to the cost benefit analysis and see what is working. if we were able to do that, i think it would be incredibly useful to point out. my guess is the answer is both spending a lotis-

of resources but bigger than that, we need to spend a lot more in education and all sorts of public investments would be my guess. what i hope we would integrate much better use of metrics. part of the problem of reforming the budget or raising revenues when you need to, as you hear stories of money not being spent well and people saying, i don't want to give any more money to washington. we need to make sure we spend the money well and we spend a lot of time with oversight and able to evaluate where we need to spend money more, and in the public investment sector, there are a lot of areas. >> i will turn to you, jerry. as popular among experts early education is an as hide the overall returns seem to be, we are also spending a lot of money on low quality early childhood education, right? >> i am not sure. certainly some. by the way, david is being humbled but he wrote a useful e- book -- one you cannot get on paper -- >> you could print it. >> but you should not print it.

>> much more efficient book onrd >> a great chapter precisely education and the programs. i recommend it. you were to look at almost any realistic budget projection, the part of the budget that contributes to what you are talking about is going down. it is going down quite quickly. as a share of gdp. as a share of gdp, once you take out net interest and entitlement, all the other programs are supposed to fall by about four percent gdp between now and 2040 according to our projections. that is a lot. given my colleagues comments, i am not suggesting every dollar we are currently spending is well spent. what i actually think a lot more that you might suggest. we do not have much time to get into this. and if you look at my blog iu sort of -- search around,

have written numerous articles about the president's proposal for early childhood. within there, i linked to a lot of people who speak to david's question is am a which is, how much i would kind of wasting on some -- things like head start that are not as efficacious as they should be? the answer is, they are not cut and dried. there are predictions based on pretty good long-term cost- benefit analysis that are doing a very good job and there are some that are not. i would agree with maya that we have to separate the wheat from the shaft. but i think we're doing some good stuff and i think we are at risk of doing a lot less. >> let's all get together and debate this in five years. thank you all. >> thank you. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013]

>> thank you so much for coming. thank you very much. >> here's some of what we are covering on the c-span networks today. on c-span, the senate armed services committee will consider

to military nominations, including the admiralty head of the u.s. strategic command. we will join that confirmation hearing in progress at 10:00 eastern after "washington journal." the senate will debate nominees for the national labor relations board. the senate is also expected to continue work on spending or transportation and housing program for the next fiscal year. the head of the sec, mary jo white, and gary gensler from the commodities futures trading commission will testify before the senate banking committee about financial regulations and risk. live at 10:00 a.m. eastern. in 45 minutes, we will talk with the former head of the federal deposit insurance corporation, sheila bair, about monitoring the financial industry. he now chairs the systemic risk council. then the former head for the centers for medicare and medicaid services, tom scully,

look set eligibility requirements and cost of the u.s. medicare program. later, bill allison of the sunlight foundation discusses congressional fund-raising third plus, your phone call, e-mail, and sweets. "washington journal" is next. ♪ with four days to go before congress leaves washington for the month of august legislative action focused on spending bills and possibly a deal on the student loan rate. here is what we are watching in washington today, a verdict is expected at 1 p.m. eastern in the bradley manning case. and the senate banking committee will talk with bank implementing the dodd frank reform bill. live coverage on c-span three at 10 a.m. we will begin us morning on washin